Guru-Approved Economic Moat Stocks

In his latest for, Validea CEO John Reese looks at the “economic moat” concept that helps guide Warren Buffett’s investment approach.

“Identifying companies with economic moats may seem like a subjective process, and to a certain extent it is,” Reese says. “But there are fundamental indicators that can be signs that a company has a moat. My Buffett-inspired Guru Strategy, which is based on the approach Buffett used to build his empire, views a lengthy history of a high return on equity as a sign that a company has an economic moat — the 10-year average ROE should be at least 15%, and the ROE should not be below 12% in any of those 10 years.”

Reese looks at 5 stocks that get high scores from his guru based strategies, and which Morningstar analysts find to have economic moats. Among them: PetSmart, which gets high marks from his Buffett- and Peter Lynch-based models.